- Lululemon’s fiscal second-quarter earnings topped analysts’ expectations with company reporting net income for the three-month period that ended July 30 of $341.6 m, or $2.68 per share, up from $289.5 m, or $2.26 per share, a year earlier.
- The company’s revenue also beat estimates, rising 18% year-over-year to $2.21 bn. This growth was driven by strong international sales, which were up 52%. China was a major driver of this, with sales in the region jumping an astonishing 61%. This was even more impressive given that China’s economy is slowing. Sales in North America were also strong, rising 11%.
- Lululemon’s gross margin was largely in line with expectations, coming in 2.3% higher at 58.8%, while the Operating margin increased 20 basis points to 21.7%.
- The company is also on track to achieve its goal of doubling annual sales to $12.5 bn by 2026. To reach this goal, the company is expanding its brick-and-mortar footprint and investing in its men’s and direct-to-consumer businesses.
- Sales in the men’s category were up 15% during the quarter, and direct-to-consumer sales were up 15%.
Lulu opened 10 new stores during the quarter, bringing its total to 672, and plans to open 35 new stores internationally in the current fiscal year. - Inventory levels are still a bit higher than historical levels, however the company is confident that it can manage this. Lululemon expects third quarter revenue to grow 17 to 18% year-over-year to between $2.17 bn and 2.19 bn. Diluted earnings per share are expected to be in the range of $2.23 and 2.28 for the quarter. We do not hold shares of Lululemon, and instead own shares of Nike in the Cratos BCI WW Equity fund.
By Lee Kern
Join our Mailing list!
Sign up to get all the latest financial news and business updates.
Sign up to get all the latest financial news and business updates.